Medicare for All is an increasingly popular proposal to expand health care access. But what’s being proposed and how would it work?
There are many different perspectives on what the U.S. should do about healthcare in order to ease the cost burden on average Americans so they don’t have to drain their savings accounts. Senator Bernie Sanders (D-Vermont), who is currently running for president, proposed a Medicare for All bill in 2017.
Sanders’ bill would replace all other insurance, with limited exceptions, such as cosmetic surgery. Private insurance, employer-provided insurance, Medicaid, and our current version of Medicare, would all be replaced by Medicare for All. The Affordable Care Act, commonly referred to as Obamacare, would also be replaced by Medicare for All.
Medicare for All is actually more generous than your current Medicare program. Right now, Medicare is for Americans 65 and older. They receive care, but they’re also responsible for some of the cost. However, Sanders’ plan would cover medical bills completed, with no financial burden on the patient.
Sanders’ Medicare for All would be a single, national health insurance program that would cover everyone living in the United States. It would pay for every medically necessary service, including dental and vision care, mental health care and prescription drugs. There would be no copays or deductibles, with the exception of prescription drugs, though the cost would be limited to $200 a year. There may also be additional out-of-pocket costs for long-term care.
The government would set payment rates for drugs, services, and medical equipment. Each year, the Secretary of Health and Human Services would come up with a national budget for all covered services and spending would be capped by that national budget. Just 1% of the total health spending budget would be used to provide job dislocation assistance for people working in the insurance industry.
Sanders’ bill includes a four-year phase-in during which increasingly younger people could buy into Medicare. It would work like this: 55-year-olds would be able to buy into Medicare in the first year, 45-year-olds in the second year and 35-year-olds in the third year. Out-of-pocket costs would be reduced for everyone buying into Medicare. There would also be a public option insurance plan offered to people of all ages through the Obamacare marketplaces.
Medicare for All is effectively single-payer healthcare. Single-payer health care is where the government pays for people’s health care. The new name just makes the concept more popular. A Kaiser Family Foundation poll found that 48% of people approved of single-payer healthcare, while 62% of people approved of Medicare for All.
How Much Would Medicare for All Cost?
If everything stays the same as it is right now, the combined healthcare spending by private and public sectors is projected to reach $45 trillion by 2026.
The libertarian-oriented Mercatus Center at George Mason University estimated that the cost of Medicare for All would be more than $32 trillion over a 10-year period.
Kenneth Thorpe, a health finance expert at Emory University looked at a version of Sanders’ Medicare for All during the 2016 campaign and estimated that the cost would be about $25 trillion over 10 years.
In order to pay for the program, Sanders has suggested redirecting current government spending of about $2 trillion per year into Medicare for All. To do that, he would raise taxes on incomes over $250,000, reaching a 52 percent marginal rate on incomes over $10 million. He also suggested a wealth tax on the top 0.1 % of households.
Pros and Cons of Medicare for All
- Universal healthcare lowers health care costs for the economy overall, since the government controls the price of medication and medical services through regulation and negotiation.
- It would also eliminate the administrative cost of working with multiple private health insurers. Doctors would only have to deal with one government agency, rather than multiple private insurance companies along with Medicare and Medicaid.
- Companies would not have to hire staff to deal with many different health insurance companies’ rules. Instead, billing procedures and coverage rules would be standardized.
- Hospitals and doctors would be forced to provide the same standard of service at a low cost, instead of targeting wealthy clients and offering expensive services so they can get a higher profit.
- Universal healthcare leads to a healthier population. Studies show that preventive care lowers expensive emergency room usage. Before Obamacare, 46% of emergency room patients were there because they had nowhere else to go. The emergency room became their primary care physician. This type of health care inequality is a major factor in the rising cost of medical care.
Pros and cons for this program partially depend on your income bracket. If you make less than $250,000, Sanders’ additional tax will not affect you. If you make more than $250,000 a year, or are in the top 0.1 % of household, Sanders’ tax to pay for Medicare for All would be a con for you.
In addition, universal health care requires healthy people to pay for medical care for the sick. However, that is how all health insurance programs work. Everyone buys in and pays the costs of health insurance, but the insurance company only pays when someone needs medical care or coverage. In every insurance plan, healthier people absorb the costs incurred by sicker people.
- Some analysts are concerned that the government may not be able to use its bargaining power to drive down costs as steeply and as quickly as Sanders predicts. Thorpe argues that Sanders is overly optimistic on this aspect of the bill.
- Other analysts are concerned that insulating people from costs of care will drive up usage of medical care. Drew Altman, who heads the Kaiser Family Foundation, pointed out that “no other developed nation has zero out of pocket costs.”
- People may not be as careful with their health if they do not have a financial incentive to do so.
- Governments have to limit health care spending to keep costs down. Doctors might have less incentive to provide quality care if they aren’t well paid. They may spend less time per patient in order to keep costs down. They also have less funding for new life-saving technologies.
- Since the government focuses on providing basic and emergency health care, most universal healthcare systems report long wait times for elective procedures. The government may also limit services with a low probability of success, and may not cover drugs for rare conditions.
Other Medicare and Medicaid Expansion Bills
Lawmakers have introduced other Medicare expansion options, which would be much more limited than Medicare for All.
Senators Debbie Stabenow (D-Michigan), Sherrod Brown (D-Ohio) and Tammy Baldwin (D-Wisconsin) introduced the Medicare at 50 Act in February of 2019. Under the Medicare at 50 Act, people between 50 and 64 could buy into Medicare. Other than expanding the age, the main difference to our current Medicare program would be that coverage would automatically include Medicare Part A (hospital), Part B (physician), and Part D (prescription drug) coverage. In addition, you could choose Medicare offered through private insurers, known as Medicare Advantage. If you qualified for a premium subsidy under the Affordable Care Act, you would still be able to apply that to extended Medicare. This bill would effectively create a new insurance option for those 50 and older.
Senator Michael Bennett (D-Colorado) and Rep. Brian Higgins (D-New York) introduced a bill called Medicare-X Choice. This bill would offer Medicare to people of any age through the Obamacare marketplaces. This bill would not be initially enacted nationwide. Instead, the bill would focus on adding the Medicare option in places with few hospitals and doctors, or areas that only had one insurer offering coverage.
Senator Brian Schatz (D-Hawaii) and Rep. Ray Lujan (D-New Mexico) proposed a bill called the State Public Option Act that would let people buy into Medicaid, rather than Medicare. The details of covered services could vary from state to state, since this would be offered through Medicaid rather than Medicare. However, no plan would be able to offer less than essential health benefits covered under the Affordable Care Act.
Where the Presidential Candidates Stand
Senators Elizabeth Warren (D-Massachusetts), Kamala Harris (D-California), Cory Booker (D-New Jersey) and Kirsten Gillibrand (D-New York) are all co-sponsors of Sanders’ bill. Former HUD Secretary Julian Castro is also a supporter of Medicare for All.
However, Harris and Booker have said even though they support Medicare for All, they don’t want to get rid of private insurance. Booker and Harris are also co-sponsors of Senator Debbie Stabenow’s Medicare at 50 Act, which would allow people from the ages of 50 to 64 to buy into Medicare. Gillibrand also supports Stabenow’s Medicare at 50 Act.
Senator Brian Schatz (D-Hawaii) reintroduced a bill in February that offers Medicare as a public option. Harris has co-sponsored that bill.
Senator Amy Klobuchar (D-Minnesota) supports the Medicare at 50 Act. She also wants to expand Medicaid and Medicare but doesn’t want to get rid of private health care immediately.
Rep. Tulsi Gabbard (D-Hawaii) has taken the same stance as Harris and Booker.
Warren has said there are many ways to get to single-payer healthcare or Medicare for All, but has been vague about her specific plan on this issue, although she has said it could include a “temporary role” for private insurance companies.
Former Rep. Beto O’Rourke (D-Texas) supports universal health care but is backing a House Democratic proposal called Medicare for America, instead of Medicare for All. Medicare for America would expand government-run health coverage while keeping employer-sponsored insurance plans.
Mayor Pete Buttigeg (D-Indiana) has said he wants to provide “Medicare for all who want it.”
Former Vice President Joe Biden took a similar stance. Biden supports an optional Medicare buy-in. His plan would create a government option for enrollees in Affordable Care Act exchanges. Employers would also be able to buy into the plan.
Former Governor John Hickenlooper (D-Colorado) supports single-payer health care as a general concept, but has not endorsed Medicare for All.
Former Rep. John Delaney (D-Maryland) supports creating a universal health care system, but not Medicare for All.
Marianne Williamson, a New Age spiritual guru, supports a “Medicare for All model.” Former tech executive Andrew Yang also advocates for a single-payer health-care system.
The Bottom Line
Healthcare is certainly a hot topic for the 2020 election process. Though Bernie Sanders’ (D-Vermont) version of Medicare for All would eventually eliminate all other forms of insurance, other Democratic candidates have varying degrees of support and versions of Medicare for All as a universal healthcare system. Though Medicare for All would likely lower the healthcare costs in the economy overall and increase quality care while also facilitating more preventative care to avoid expensive emergency room visits, you could end up paying more if you make more than $250,000 a year or are in the top 0.1 % of households. What’s more, some experts suggest that if costs are less onerous, patients will overuse the system and make setting up appointments for elective procedures more difficult.
Tips for Keeping Your Finances Healthy
- A health savings account (HSA) may be a good option for younger people who are worried about potential healthcare costs. HSAs can greatly reduce monthly premiums.
- Whatever the outcome on Medicare for All, it is important to keep yourself physically and financially healthy. If you are concerned about budgeting with health care costs, you may want to look into a financial advisor. SmartAsset can help you find your financial advisor match here.
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